Expert amazed at strange ship price gap

Photo: TS Laevad

An international ship building consultant wonders at ships built for Port of Tallinn in Poland costing €17.5m more than those built in Turkey, though labor costs in the two plants only differ by a million. 

«Strange to run into a €17.5m price difference in two shipyards. Where does it come from?» asks an international ship building consultant in a written assessment obtained by Postimees. The individual being familiar with details of new ships building project of Port of Tallinn, Postimees opt to not disclose the name of the expert.

To explain the wonderment, the individual disclosed labour costs difference at the plants in Poland and Turkey: while at Remontowa shipyard in Poland the average workman wage is €798 a month, in Turkey’s Sefine pays only €61 less i.e. €737.

Meaning that a ship builder in Poland only makes 38 extra eurocents per hour. «Fill in 975,000 hours (the time it takes to build a ship – edit) of hard work and the difference will be a maximum of €500,000 per vessel,» writes the expert.

The expert continues that other price components are rather similar in the projects – the metal price acquired from global market, and the engines built in Europe. «Thus there have to be some other costs related to logistics,» suggests the expert.

The «logistics factor» might be the bribe regarding which criminal suspicion was filed against former Port of Tallinn deputy head Allan Kiil in charge of said procurement.

Meanwhile, the consultant deems it realistic that the four vessels will be completed by end of summer but «whether they will be able to outright operate then is another matter».

«It takes a minimum of 14 days for ships from being completed to total operation readiness. Add a minimum of ten days for controls,» deliberated the expert. «It is one thing to assemble a ship, and a totally different matter to deliver a completed one. On the basis of our information, it is highly questionable whether these vessels will be ready according to schedule, and what will be the final price for that to happen.»

Considering it will take the vessels three weeks to sail from Turkey to Estonia and after that two weeks to get trained for the new lines, they must be delivered at the plants in second half of August, latest.

TS Laevad board member Kaido Padar said they are on schedule in Turkey – even ahead by a week or two.

Regarding the labour costs in the two plants, Mr Padar says this is not reflected in the contracts entered with the plants while only specifying the various stages of construction and the related costs. «We may assume that in Poland the labour costs are higher; meanwhile, we do not precisely know at what prices the builders buy material like the metal, and how high are the general or administrative costs,» said Mr Padar to explain potential price differences.

Port of Tallinn will be operating the Muhumaa and Hiiumaa lines starting October 1st. The €17.5m price difference between plants in Poland and Turkey was published by Riigikogu anti-corruption committee chairman Artur Talvik.